What to know about fire insurance

Covering your home for fires

This week’s wildfire outbreak in San Diego County is giving homeowners a real-world reminder to make sure their insurance policies are up to date and adequate.

After the 2007 wildfires, a number of San Diegans found out the hard way that they were underinsured and couldn’t replace everything that was lost.

“One of the biggest challenges that we have after major disasters is people don’t realize what coverage they have,” said Pete Moraga, a spokesman for the Insurance Information Network. “Many times people will buy a home, they’ll get their policy and then throw it in a drawer and just pay every year.”

In California, a standard homeowners insurance policy covers fire damage, but the extent of that coverage may not be enough for what a person needs to protect. That’s especially important in San Diego, where the insurance network says 239,000 homes, about 20 percent of all properties in the county, are at high or extreme risk of wildfire damage. Another 276,000, or 23 percent, are at moderate risk of damage.

Homeowner’s insurance covers not only the home itself, but property inside. More than 90 percent of homeowners buy the insurance, and about 30 to 40 percent of renters buy insurance for their values, Moraga said. Here are some tips on how to make sure you’re protected:

• Make sure the coverage is adequate. Homeowner’s policies don’t cover the amount you paid for your house, but how much it would cost to rebuild it, which is often more expensive because it includes new building materials, clearing debris, and also there’s no bulk discount. That’s why it’s important to make sure you have enough coverage in case you need a full replacement. For instance, a home could include copper pipes, which are expensive to replace and therefore can add to cost. Or a home could be built on a slope, making it more difficult to build.

• Review your policy every year to discuss coverage options. Update the policy if you recently remodeled so that it covers all of your investment. It’s a good idea to at least look at policy limits, which typically appear on the declaration space under “Section 1, Coverage A, Dwelling.”

• Make sure to buy insurance even if your home is already paid off. Otherwise, the maximum federal grant for disaster recovery is $33,000, nowhere near enough to rebuild a home. Also, know whether your policy pays to replace items or gives actual cash value for losses, which accounts for depreciation. For the latter, a 10-year-old couch would be replaced with the value of a 10-year-old couch, which likely won’t be enough to replace the couch.

• Document everything in your home. If you have to evacuate, it will be much easier to get insurance companies to replace items if you can prove you had them. The California Department of Insurance recommends using a smartphone to take a video walk-through of your property, narrating everything that you have, making sure to mention value and other key details.